NEW YORK, Nov. 27, 2012 /PRNewswire/ -- Bernstein Liebhard LLP today announced that a securities class action has been commenced in the United States District Court for the Northern District of California on behalf of a class (the "Class") of purchasers of Hewlett-Packard Company ("HP" or "Hewlett-Packard" or the "Company") (NYSE: HPQ) common stock between August 19, 2011 and November 20, 2012, inclusive (the "Class Period").
The complaint charges Hewlett-Packard and certain of its officers and directors with violations of the Securities Exchange Act of 1934. Hewlett-Packard provides products, technologies, software, solutions and services to individual consumers and small- and medium-sized businesses, as well as to the U.S. government, and health and education sectors around the globe. Hewlett-Packard also provides software solutions through its Software business segment. On August 18, 2011, the Company expanded its software offering when it announced that it would acquire control of Autonomy Corporation plc ("Autonomy") for $10.2 billion.
The complaint alleges that during the Class Period, defendants concealed that the Company had gained control of Autonomy in 2011 based on financial statements that could not be relied upon because of serious accounting manipulation and improprieties. In addition, defendants concealed known negative business trends concerning the profit margins of the Company's Enterprise Services business, formerly known as Electronic Data Systems Corporation ("EDS"), which Hewlett-Packard had acquired in August 2008 for $13.0 billion. As a result of defendants' false and misleading statements, the Company's stock traded at artificially inflated prices during the Class Period, reaching a high of $29.89 per share on February 16, 2012.On August 22, 2012, Hewlett-Packard issued a press release announcing a third quarter 2012 earnings per share loss of $4.49, largely as the result of an $8.0 billion charge for impairment of goodwill associated with the acquisition of EDS. On this news, the Company's stock price dropped $1.56 per share to close at $17.64 per share on August 23, 2012. Then, on November 20, 2012, the Company disclosed it had taken an $8.8 billion charge related to its acquisition of Autonomy due to serious accounting improprieties. On this news, the Company's stock price dropped $1.59 per share to close at $11.71 per share, a decline of 12%, on volume of 155 million shares. According to the complaint, the true facts, which were known by the defendants but concealed from the investing public during the Class Period, were as follows: (a) at the time Hewlett-Packard acquired Autonomy, the business's operating results and historic growth were the product of accounting improprieties, including the mischaracterization of sales of low-margin hardware as software and the improper recognition of revenue on transactions with Autonomy business partners, even where customers did not purchase the products; (b) at the time Hewlett-Packard had agreed in principle to acquire Autonomy, defendants were looking to unwind the deal in light of the accounting irregularities that plagued Autonomy's financial statements; and (c) Enterprise Services' operating margin had collapsed from 10% in 2010 to approximately 6% as of April 30, 2011, 4% as of October 31, 2011, and 3% as of April 30, 2012, due to various reasons, including unfavorable revenue mix and underperforming contracts.